S&P 500 suffers worst day since late August; Twitters surges

A sign displays the Twitter logo on the front of the New York Stock Exchange ahead of the company's IPO in New York, Nov 7, 2013. Frenzied buying in Twitter shares grabbed Wall Street's attention on Thursday, as the social media stock surged well above expectations, while major indexes fell, with the S&P 500 suffering its worst daily decline since August. -- PHOTO: REUTERS

NEW YORK (REUTERS) - Frenzied buying in Twitter shares grabbed Wall Street's attention on Thursday, as the social media stock surged well above expectations, while major indexes fell, with the S&P 500 suffering its worst daily decline since August.

The broader market was hurt by weak earnings from Whole Foods and Qualcomm. The tech-heavy Nasdaq index recorded its biggest daily decline in a month.

"Twitter is grabbing all the attention here, but what you should really look at is also how the Nasdaq and the small caps are suffering today while the defensive stocks are holding up. It suggests that there are cracks under the surface," said Mr Ryan Detrick, analyst at Schaeffer's Investment Research in Cincinnati, Ohio.

Twitter Inc soared as much as 92 per cent in its first day of trading on the New York Stock Exchange as investors snapped up shares in the popular microblogging site in a frenzy that recalled the days of the dot-com bubble.

The shares opened at US$45.10 a share, up from the initial public offering price of US$26 set Wednesday, then added to those gains, hitting a high above US$50. The stock closed up 73 per cent at US$44.90 with 117 million shares traded.

The rest of the market was more downbeat. Qualcomm shares fell 3.8 per cent to US$67.09, one of the biggest drags on both the S&P 500 and Nasdaq 100, after the company forecast revenue below expectations.

The Dow Jones industrial average was down 152.90 points, or 0.97 per cent, at 15,593.98. The Standard & Poor's 500 Index was down 23.34 points, or 1.32 per cent, at 1,747.15. The Nasdaq Composite Index was down 74.61 points, or 1.90 per cent, at 3,857.33.

The Nasdaq was led lower by an 11 per cent drop in Whole Foods after its results on Wednesday, while Tesla Motors continued its slide, dropping 7.5 per cent one day after a big fall on lacklustre earnings and a third car fire. Tesla remains a favourite among short-sellers who believe it is overvalued.

The Russell 2000 index of mid- and small-cap stocks fell 1.8 per cent, its worst daily decline since late August.

Trading in OTC securities was resumed at 3PM EST (4AM Singapore time) after a connectivity issue that had triggered a halt in more than 10,000 equities was resolved.

Investors in US stocks shrugged off the European Central Bank's move to cut interest rates after a slump in inflation sparked fears the euro zone's economic recovery could stall. The move reinforced expectations global central banks will continue to buoy struggling economies.

Separately, data showed the US economy grew 2.8 per cent in the third quarter, but that estimate, which will be revised, was affected by a larger-than-expected build-up of inventories, which tends to subtract from growth later on. Initial jobless claims fell 9,000 to a seasonally adjusted 336,000 last week, roughly in line with expectations.

Those reports, as well as Friday's much-anticipated jobs numbers, will give investors some insight into how long the Fed will keep buying US$85 billion (S$106 billion) a month in bonds. The central bank's stimulus has been a key component of the 24.1 per cent year-to-date gain in the S&P 500, putting the index on pace for its best yearly performance since 2003.

About 6.7 billion shares of NYSE-listed securities, AMEX and regional exchange-listed securities and Nasdaq-listed securities traded on Thursday, according to data by Bats Global Markets.

The Straits Times

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